In a private email to Kugler, PayPal said it couldn't pay him because of compliance guidelines, which mandate that users of PayPal's website must be at least 18 years old in accordance with the company's User Agreement. He will turn 18 next March.

In email correspondence, Kugler told PayPal he'd be happy with some other sort of recognition. In the meantime, Kugler posted a proof-of-concept demonstration of the vulnerability on Full Disclosure, a forum for listing security problems.

Kugler said he didn't know that the particular vulnerability had already been found by another researcher, which would have made him ineligible for the reward. Like many companies, PayPal only offers a reward to the person who found an issue first.

Kugler said he wouldn't have posted the information on Full Disclosure if he had known he wasn't the first to find it. The proof-of-concept isn't dangerous, but "generally the vulnerability can be used for malicious purposes," he said.

The flaw hasn't been patched yet, although PayPal said it is working on one. No customer information has been compromised yet, PayPal said.

Still, it wasn't an ideal situation. Hackers can often figure out a vulnerability given a few clues and can quickly develop an attack to exploit one.

As one commentator on Reddit wrote, "Seems like a really bad idea to not pay the kid. I mean the whole point of incentives for bug reporting is to keep people from exploiting them. You pay the person a few grand and save your business several thousand in lost revenue."

A PayPal spokeswoman said Wednesday it is investigating whether it can lower the qualifying age for vulnerability rewards for those who responsibly report security problems.

Kugler will also receive a letter of acknowledgement from Michael Barrett, PayPal's chief information security officer.

"We appreciate the security researcher's efforts, and this situation illustrates that PayPal can do more to recognize younger security researchers around the world," it said in a statement.

Kugler has a record for finding security problems. He's received two payments for US$4,500 from Mozilla for finding two problems in its Firefox browser and also was listed as a noted security researcher by Microsoft last month.